A pool of new and used vehicles will secure the World Omni Auto Receivables Trust, 2022-D transaction, which is slated to raise either $867.5 million or $1.0 billion in asset-backed securities (ABS), depending on which pool is selected for securitization.
While assessing the deal's potential credit positives and negatives, FitchRatings noted that the deal's percentage of extended-term loans, 80.9%, is near the higher end in recent historical deals. Extended-term loans are those with terms greater than 60 months. Meanwhile, loans with FICO scores of 700 or higher account for 76.4% of the pool, up slightly from the 2022-C pool. There are mitigating factors about that aspect of the deal, according to Fitch.
For one, the percentage of extended term contracts in the transaction, WOART 2022-D, has steadily increased in WOART since 2011-A, where such loans accounted for only 42.9% of the pool, Fitch said. Also, the percentage is largely in line with recent transactions, such as WOART 2022-C, with had 80.75% of extended-term loans. Also, the rating agency was the increase in terms can be partially explained. Manufacturers and overall lending trends are leaving consumers subvention programs that lower monthly payments, especially as vehicle prices increase, Fitch said.
BofA Securities is lead underwriter on the transaction, which World Omni Financial Corp. sponsoring, according to Fitch. The company is also servicer, and another entity is depositor. The capital structure calls for the six classes of notes to be repaid sequentially. All principal payments will be made sequentially to each class in order of seniority, beginning with the class A-1 notes.
Fitch credits the transaction for having consistent criteria for pool selection. World Omni has filtered out all contracts with non-zero FICO scores below 650 since 2017, and since 2017 the company has removed any make that wasn't a Toyota, the rating agency said.
Some 42,537 loans are in the pool and on average, they have a principal balance of $23,100. On a weighted average (WA) basis, the assets have a FICO score of 753, original loan term of 69 months, and a remaining term of 61 months.
Fitch expects to assign ratings ranging from 'F1' on the $180 million, A-1 notes through 'A' on the $13 million, C notes. The notes also have legal final maturities ranging from October 2023 through December 2029.
